NCDRC Raps Insurance Company For Ambiguous Term; Directs Payout For Son Killed Riding Bike Registered In Mother’s Name [Read Order]

The National Consumer Disputes Redressal Commission (NCDRC), New Delhi recently rapped the United India Insurance Co. Ltd for using an ambiguous term, “owner-driver” in their policy and then refusing a woman’s claim relying on the same.

The NCDRC Bench comprising Dr. SM Kantikar and Mr. Dinesh Singh was hearing a revision petition filed by the insurance company, challenging the order passed by the District Forum and the State Commission, finding it guilty of deficiency in service. The impugned orders had directed it to pay the insured amount of Rs. 1,00,000 to the complainants, with interest at 8% per annum from the date of filing the consumer complaint till the date of actual payment.

The complaint was filed by the parents of one Shobhit Kumar, who had died in a road accident while driving a motorcycle insured with the petitioner insurance company. The registered owner of the vehicle was the mother of the deceased.

The award of insurance amount was challenged mainly on the ground that the term “owner-driver” in the policy meant that the policy covered only the owner as the driver, and since the vehicle was not being driven by the owner at the time of the accident, the insurance amount should not have been awarded.

The complainants, on the other hand, had contended that the term ‘owner–driver’ includes the owner as well as their son, who was driving the motorcycle with the consent of the registered owner– premium payer, the mother and was a major with a valid driving licence.

The NCDRC agreed with the complainants’ contention, noting that while the term owner-driver is ambiguous, to a reasonable person, it would seem to include the owner as well as the driver.

“The term ‘owner – driver’ is in itself ambiguous and unclear. In case it was meant to construe only the owner-cum-driver herself driving, the same should have been unambiguously and clearly stated in the insurance policy. As would appear to a reasonable person, the proposition intended to be conveyed and understood was that the owner, as well as the driver, will be covered under the policy (and especially if the registered owner buying that policy was a lady and the subject vehicle was a motorcycle and the area in which the lady resided was a district like Mainpuri in the Chambal region of Uttar Pradesh),” it observed.

The onus, it said, was on the insurance company to make its terms and conditions unambiguous and clear, at the time of selling the policy to the registered owner. Having included the ambiguous term in the policy, NCDRC opined that the insurance company was not just guilty of deficiency of service but also of unfair trade practice.

Therefore, along with upholding the impugned orders, the insurance company was also directed to discontinue the practice and make the term ‘owner-driver’ unambiguous and clear in its policies. A report of compliance of the same was directed to be submitted within three months.

The commission further rapped the company for dragging on the complainants’ claim, and imposed an additional compensation of Rs. 2,00,000 with interest on it for the “loss and injury, continuous harassment and difficulty” faced by them.

The petition was then disposed of, with the assertion that if the insurance company delays the adjudicated payments beyond the stipulated time of three months, it would and should attract higher / penal interest and other compensation/costs. It explained,

“And consumer justice in the true sense has to be met. Once the amount awarded for deficiency in service and the amount awarded in addition for unfair trade practice are adjudicated and determined, the onus is on the insurance co. to be prompt and dutiful in making the necessary payments within the stipulated time. Creating yet further harassment, uncertainty and difficulty for the ordinary simple consumer by delaying payments or making reduced payments etc. (if the adjudication is not stayed or quashed or modified by a higher authority/court) will be an unacceptable situation, to be viewed seriously - the harassment, uncertainty and difficulty of the consumer should end promptly and fully, the chapter should close.”

Read the Order Here